Consultant did not get paid for services yet

[rodimus]

I have a friend who runs an architecture office. One of his client has been behind on paying the bills, and now owes my friend about $90,000. My friend tried to call him but no answer. He just keeps on delaying and missing appointments.

In this situation, what are the chances of my friend getting his $ back if he takes legal action? The client is a property developer, and we just heard rumours that he did not pay a lot of consultants in the past.

Any lawyers solicitors here?

 

[JoannaK]

There's something called the Building and Construction Industry Security of Payment Act 1999, which your friend would be covered under. There are certain procedures your friend must follow to recover his funds which will then enable him to send the sherrif around.

 

[shazza]

Considering the amount of money involved I think just calling is not enough. Solicitors can write stern letters asking for the money to be paid or your friend could look at getting a debt collection company to retrieve the money.

Good luck.
Sharyn

 

[pennyk]

and in future, encourage your friend not to release drawings, reports etc until payment has been received. I do this is my business and it makes life much less stressful!

Pen

 

[rossv]

hi,

to be honest if your friend is an architect he should be well aware of the act joannak mentions....

if not tell him to read it.

http://www.parliament.nsw.gov.au/prod/parlment/NSWBills.nsf/1484fd8a7ada6a26ca25691c001793ed/2500fd88117cff8aca256c6f0033737a/$FILE/b02-117-p03.pdf

unfortunately if he has not followed the correct procedures to this point it may not help him at this stage.


rossv

 

[skater]

I'm sorry I can't offer any extra advice than what has gone before me, but I have to ask one question.

HOW DID THE DEBT GET THAT BIG?

$90k is a huge sum to be owed & I assume this was not just the one outstanding debt. I know it is a hard thing to say, but maybe he just learnt a very expensive lesson.

I hope all goes well for him. Keep us informed, & good luck (my gut feeling is that he is going to need it).

 

[Peter 14.7]

There's something called the Building and Construction Industry Security of Payment Act 1999, which your friend would be covered under. There are certain procedures your friend must follow to recover his funds which will then enable him to send the sherrif around.

That is NSW specific act FYI.

Peter 147

 

[rossv]

hmmm,

good point peter

looks like rodimus is from vic ....

http://dms003.dpc.vic.gov.au/sb/2002_Act/A01059.html




rossv

 

[rodimus]

Guys,

here is a question to see if anyone can come up with some clever tactics.

Say if you are a consultant, and you only have 1 client, a ONE big client who gives you several jobs. And that client keeps delaying payment, time and again.

1. You want to to withold your documents and not issue to him before he pays you, but that might offend him and he can anytime go to another consultant.

2. You need to pay your people, and your bills are stacking up.

3. Its a huge sum of money involved, say $100,000.


What tactic can you think of?
I have a friend who is in that situation.

 

[Andrew]

My BIL is an architect and when he wasn't paid he told the client that the
copyright wasn't transferred until payment was made and that if they built a
structure based on those drawings that he'd make them tear them back down.

He might have been blowing hot air which would only work against a smaller
developer/owner builder.

Can your friend place a caveat on the properties, so that the builder can't
sell them until the debt is cleared? I don't know what the process is to have
a caveat placed on the title, maybe someone can enlighten us.

andy

 

[rodimus]

hmm, usually an architect's design's right is sold to the Client when the drawings are given to the client. It is seen as a consulting work done for the Client, which has the rights to the drawings and also the design.

DOnt know what else he can do, other than get a lawyer and then find another/more Client.

 

[pennyk]

Rodimus,

Unless your friend begins acting like he is in charge, then this company will continue to take what they can.

Keeping short accounts in business is like disciplining children. You need short lead times between action and consequence and consistent responses. and the sooner you start, the easier it is to make it work.

So, basically this person needs to say I will not release any work to you and will not continue to do work until you pay me. If he is accruing other costs, then this company will need to pay for them up front. Find the point at which this company does need him and bargain at that point.

A big client who doesn't pay is no use to you. You are far better off with a little client who pays what they owe you! Your friend might offend them, but at the moment, they are taking them for granted and they'd be better looking for an alternative client anyway. The situation they are in is worse than being an slave! They are basically working for nothing - and paying others to work for them. They are on a sure course to bankruptcy if they continue. And this big company can probably smell the fear on them and just keeps on not paying them - he's already shown he's not going to do anything to them.

Stop doing the work for them and begin sending letters of demand and if that doesn't work, start legal action immediately. Once they learn that they can't take them for granted, then possibly consider work for them again - but on your terms not theirs. Being polite and clever doesn't very often work in this situation. You need to stick to your guns and be stronger than they are.

Is he confident that this company he's working for is liquid? I had this situation with a company I used to deal with... and thought it was just me. Then I discovered they weren't paying anyone. It sounds like this company could be the same. Appears very strong, but actually has no money.

Honestly, I would tell your friend to stop working for them as soon as possible, particularly if he is accruing other costs on the way. It's no way to run a business, to be totally dependent upon one person, who is not a consistent payer. Get out of there, fast!

Pen